Nigeria’s $20 billion Dangote refinery is set to shake up international crude flows when it reaches full capacity, having already made an impact since coming online in January, trading sources and ship tracking data as shown.
Nigeria is sub-Saharan Africa’s largest oil producer, pumping 1.5 million b/d in June, according to the Platts OPEC Survey from S&P Global Commodity Insights.
Until this year, all of the country’s oil was exported due to lack of refining capacity, with gasoline, diesel and jet fuel imported for domestic use.
In its first six months, the plant has scaled to 400,000 b/d and delivered diesel, jet fuel, naphtha and fuel oil to both domestic and export markets, according to company sources and ship tracking data.
Petrol should be produced in Nigeria from mid-August.
Nevertheless, the refinery has already affected crude flows, with dozens of Nigerian cargoes remaining in-country and US WTI Midland, a comparable light, sweet grade, being imported, the S&P report disclosed.
The mega-refinery could therefore tighten the light, sweet crude market.
“Its diet is WTI and the lighter Nigerian [crudes] so if you were chasing those barrels you’d probably feel it quite keenly,” a West African crude trader told Commodity Insights.
“Once they get to 650,000 b/d without any WTI Midland, ‘severely disrupted’ (will be) the headline.”
WTI Midland crude initially emerged as the favored feedstock to supplement Nigerian supply, with the refinery signing long-term supply contracts for the US grade and noting its competitive pricing. Platyts, part of Commodity Insights, last assessed WTI Midland into Rotterdam at $82.36/b on July 31, while Nigeria’s Bonny Light was assessed at $82.80/b on the same day.
The US grade accounted for 30 per cent of crude delivered to Dangote, through 18 cargoes.
Domestically, Dangote has alleged that IOCs had been charging it a $6/b premium for crude in June, leading Nigeria’s government to seek to mandate local supply at “market price” and facilitate crude payments in naira.
On July 14, owner Aliko Dangote said the facility would broaden its feedstock sources with Libyan, Angolan, and Brazilian crude.
“The refinery was built to use Nigerian crude and add value to it within Nigeria. Why should we deviate from that focus?,” a Dangote executive said, adding that the crude supply issues were, “getting resolved,” but that the refinery remained open to all opportunities “to supplement it”.
“Dangote refinery is designed to process a range of light and medium grades of crude oil, including Nigerian grades,” Associate Director and Head of Refining at S&P Global Commodity Insights, Rasool Barouni said.
“Other similar grades including other WAF grades could be an option.”
Crude flows in and out of the Dangote refinery have been felt in other markets, especially in Europe, the largest consumer of light, sweet Nigerian crude.
S&P Global commodities at sea data shows European imports of Nigerian crude have slumped since January, with only imports of US oil falling by more. Meanwhile, Brazil, Egypt, Libya and Guyana have boosted supply to Europe. Analysts caution that refinery maintenance and other factors could have played a role.
Nigeria — which previously did not import crude — has seen the largest increase in WTI Midland imports globally since the refinery’s inauguration.
A growing call on WTI Midland could affect Asia and Europe, the main export markets for the US crude which has emerged as a “swing” grade in recent years.
For two consecutive years, Europe has ramped up WTI Midland imports by 20 per cent to plug gaps left by sanctioned Russian oil.
On a macro basis, Nigerian exports have fallen in successive quarters since last year. CAS data shows Nigeria exported 1.4 million b/d in Q1 2024 and 1.24 million b/d in Q2 2024, down from 1.5 million b/d in Q4 2023.
Analysts are waiting for the plant to hit 600,000 b/d and start producing gasoline before assessing its impact, but note it is already leaving a mark on the light, sweet complex.
“The refinery’s opening has certainly had an impact on trade flows, especially for Nigerian crudes and WTI,” research associate director at Commodity Insights, Payam Hashempour said.
“But, we should see the full impact on global trade flows once the refinery’s operation ramps up.”
Peter Uzoho
Follow us on:
The Philippines is stockpiling food, evacuating towns, and deploying soldiers in preparation for Typhoon Yinxing,…
Harris has concluded her campaign in Philadelphia while Trump gathers support in Michigan as election…
A Pennsylvania judge has approved Elon Musk's plan to give away $1 million in support…
The Israel Hostages Group has urged for an investigation after a Netanyahu aide allegedly leaked…
Japan has launched LignoSat, the world’s first wooden satellite, to explore timber's potential in sustainable…
Human Rights activists have renewed calls for Iran to release a woman who undressed in…
View Comments
📞📞📞📞📞📞Toyota Sienna=700,000
Toyota Picnic=#650,000
Toyota Camry Muscle=850,000
Toyota Spider=1.2million
• Toyota Land Cruiser-N1.5 million
• Toyota Prado N1.6 million
• Toyota Corolla –N650,000
• Toyota Camry –N450,000-N1M
• Toyota Avensis – N950,000-N1M
• Toyota Yaris – N800,000
• Toyota Venza – N2.2 million
• Toyota RAV4 SUV –N950,000
• Toyota Hilus Pickup-N950,000
• Toyota Dyna Truck – N1.3million
• Toyota Hiace Bus – N1.5 million
* Toyota Highlander-N1.2 million
*Toyota Big daddy-N850,000
Tacoma 1.850,000
Honda Civic cars – N850,000
Honda Accord – N950,000
Honda CR-V –N980,000
Honda CR-V –950,000
Honda Pilot – N900,000
Tundra 2.m
*Prices of some Volswagen cars:
golf 1 = 250,000
Golf 2,-N350,000
golf 3 -400,000
golf 5 -N500,000
Jetta-N350,000
Passat-N450,000.
BENZ C3OO.#1.1MILLION
BENZ-GLK.#2.1MILLION
BENZ =ML550.#3.2MILLIO
Lexus RX300-N950,000
Lexus RX330-N1.2 mill
Lexus RX350-N1.5 mill
Lexus GX460-N3.2 mill
Lexus GX470-N4.5 mill
Toyota Sienna = 700,000
WE DELIVER TO 36 STATES
YOU CAN CALL THE MARKETING OFFICER FOR MORE INFORMATION ( Omar ) OR YOU ADD ME UP ON WHATSAPPO8O__6739__9O9O